This Thesis consists of an introduction followed by three independent chapters. Each chapter
is a self-contained paper that can be read independently. They cover different topics of
international economics with a specific focus on multinational production and international
trade. A common feature to all the papers is that they are micro-based empirical analyses of
the effects of globalization on the competitiveness of companies. The first and last chapters
are solo papers, while the second is coauthored with Friedrich Bermann, PhD student at
Copenhagen Business School. The first paper studies the impact of foreign direct investment on the intensity of competition
in the host economy. In this chapter I use firm-level data of Romanian manufacturing
companies active between 2001 and 2008 and I measure the impact of foreign ownership on
the market power of affiliates and local competitors. The empirical evidence shows that foreign
ownership is associated to a higher market power, which I proxy with firms’ estimated
markups. Moreover, I find that higher competition of foreign affiliates is associated to a
decrease in the markups charged by domestic firms. In the second chapter we analyze how the strategy of vertical integration of foreign
multinationals modifies the nature of productivity spillovers perceived by local suppliers
(i.e. backward spillovers). Building on the results of previous research on productivity
spillovers and on multinational production, we argue that backward productivity spillovers
should be weaker if foreign multinationals are vertically integrated in the industry of local
suppliers. We test this hypothesis using a panel dataset of firm-level data of European
manufacturing companies. We find that the vertical integration of foreign multinationals
does in fact modify the intensity of spillovers to local suppliers. Domestic firms benefit only from the activity of foreign clients that are not vertically integrated in their industry.
In the last chapter, I use a detailed dataset of international transactions of Danish
companies to study the impact of Chinese competition on the pricing strategy of Danish
exporters. I also explore the role of quality differentiation in determining the nature and
intensity of this effect. I find that Chinese export represents a source of stiffer competitive
pressure for Danish exporters that are forced to reduce the prices they charge. This effect
depends on the quality of Danish products. I find the producers of low-quality goods reduce
their prices less intensively than producers of high-quality ones. This is because producers
of low-quality varieties react to Chinese competition upgrading the quality of their products.
This mitigates the downward pressure on prices. I finally reconcile these results by using
quality-adjusted prices. Using this measure I find that quality does in fact protect Danish
exporters from the pressure of Chinese competition.